Arizona’s housing market saw robust activity from “budget-conscious” households (those earning under $250K) between 2018 and 2023. A combination of rapid population growth, rising incomes, and historically low interest rates (especially in 2020–2021) fueled home purchases. However, home prices rose much faster than incomes during this period, straining affordability.
The state’s homeownership rate climbed notably in the late 2010s, reaching a peak of 71.7% in 2020 (up from 64.2% in 2014), as many moderate-income renters transitioned into homeownership during the boom. By 2023 the homeownership rate settled around the high-60s, still above early-decade levels.
Dramatic Price Growth
Home price growth far outpaced income growth. The typical Arizona home value nearly doubled from 2018 to 2022–2023, with the statewide median sale price rising from roughly the mid-$200,000s in 2018 to around $430,000+ by 2023. This appreciation dramatically outstripped household income gains (median household income rose only ~20% in that span).
As a result, the share of homes affordable on a median income plummeted. In the Phoenix area, only 28.2% of homes were affordable to a median-income family in 2021, down sharply from years prior. By 2022, Arizona’s typical homebuyer needed an income about 80% higher than in 2020 to comfortably afford a median-priced home (roughly $106K/year income needed in 2024 vs $59K in 2020).
Creative Solutions
This affordability crunch forced many sub-$250K households to get creative in order to buy homes – pooling finances, choosing smaller or farther-flung homes, or leveraging down payment assistance.
Despite affordability challenges, Arizona’s population growth (top-5 in the nation most years) provided a steady influx of moderate-income buyers. Many were drawn from higher-cost states, bringing savings or equity that helped them compete in Arizona’s market. Remote work trends also allowed some households to move from expensive coastal cities to relatively affordable Arizona.
By early 2022, suburban areas were especially hot: every one of Zillow’s top 10 hottest U.S. markets at that time was a suburb about a half-hour outside a major city. Arizona reflected this pattern as buyers seeking value flocked to suburban communities on the outskirts of Phoenix and Tucson.
Overall, 2018–2023 saw strong homebuying demand from households under $250K, but with growing pains as price hikes and limited supply tested buyers’ budgets.
Owner-Occupied vs. Investor Purchases in this Income Bracket
During the 2018–2023 housing frenzy, Arizona saw a surge in investor activity that competed with owner-occupant buyers – even among moderate-income households.
The Investor Surge
Investor purchases of homes hit record levels in 2021: investors bought 18% of all U.S. homes in Q3 2021, the highest share on record. Phoenix was one of the epicenters of this trend, attracting big and small investors chasing rising rents and home values. By Q2 2022, over 31% of Phoenix home sales were to investors – nearly one in three purchases.
Many of these were institutional buyers and cash-flush investors, but households under $250K also participated in investment activity, often by purchasing rental properties or second homes.
Owner-Occupant Competition
Owner-occupant purchases remained the majority of transactions for sub-$250K earners, as most in this bracket were buying primary residences. But they often found themselves bidding against investors for starter homes. Investors focused heavily on lower-priced single-family houses (which made up about three-quarters of investor buys), precisely the starter-home segment that budget-conscious families target.
This competition meant owner-occupants had to act fast and be flexible – some waived contingencies or sought alternate financing to compete with cash offers.
Non-Owner Occupied Properties
Notably, a significant portion of Arizona’s housing stock is now held by non-owner occupants. By 2022, roughly 26% of residential properties in Greater Phoenix were either investor-owned or used as seasonal/vacation homes.
While many investors were large companies, a number of moderate-income local residents became “mom-and-pop” landlords during the boom – for example, renting out their previous home and buying a new one, or purchasing a small multifamily property.
Overall, however, the frenzy of 2020–2021 benefited established investors the most. For the typical Arizona household under $250K, the investor boom was a double-edged sword: it added pressure in the starter-home market, yet some households in this bracket did manage to become small-scale investors themselves by leveraging low interest rates and rising equity.
Regional Variations Across Arizona Markets
Phoenix Metro (Maricopa County)
The Phoenix area dominated Arizona’s housing activity and exemplified statewide trends. Phoenix’s economy and population grew rapidly from 2018–2023, fueling housing demand. Home prices in Metro Phoenix skyrocketed – the median sale price hit $475K in mid-2022 (a record high), up from the mid-$200Ks in 2018.
This sharp rise priced many middle-income families out of central areas. As a result, buyers increasingly looked to suburbs and exurbs like the West Valley and Pinal County for affordable options. The suburban shift was pronounced, with previously distant communities becoming hot markets as families sought larger homes and reasonable prices.
Phoenix also had one of the nation’s highest investor penetrations, which was especially felt in lower-priced neighborhoods. By 2021, Phoenix’s affordable-home inventory had fallen below the national average for the first time in over a decade, illustrating how hard it was for budget-conscious buyers to find reasonably priced homes.
Despite this, Phoenix remained a top destination for out-of-state movers (including many moderate-income remote workers), ensuring continued demand.
Tucson Metro
Tucson saw more modest price growth and gentler competition than Phoenix, making it somewhat more accessible for sub-$250K households. The average home value in Tucson was about $327K in 2023 (nearly $100K lower than Phoenix). Tucson’s slower growth economy meant fewer bidding wars, and investors were less prevalent than in Phoenix.
Local buyers with modest incomes often could find townhomes or older single-family homes within reach, especially on the city’s south and west sides. That said, Tucson wasn’t immune to the pandemic-era surge: affordability worsened here too in 2021–2022, and by 2023 only 38% of Tucson homes were affordable to median incomes (down from 64% in 2012).
Regionally, Tucson buyers did not have to sprawl as far to find affordable homes – surrounding suburbs (Marana, Vail, etc.) grew, but much of the activity stayed near the city. Overall, Tucson offered a comparatively more balanced market for moderate earners, though prices were on a slow climb.
Northern & Rural Arizona
Smaller housing markets like Flagstaff, Prescott, and rural counties present a different picture. Flagstaff in particular is a challenge for budget-conscious buyers – it’s a high-cost mountain town where median prices in 2023 hovered around $600K-$700K, driven up by limited supply and demand for vacation homes. Few local households under $250K can afford to buy in Flagstaff, leading many to either continue renting or move to lower-cost areas. Some relief comes from townhomes/condos in Flagstaff, but even those are pricey.
Prescott and Yavapai County saw an influx of retirees and remote workers during 2020–2021, pushing prices upward; moderate-income workers there often turned to manufactured homes on the outskirts or moved down to the Phoenix outskirts for better affordability.
In rural Arizona (e.g., parts of Pinal, Mohave, Cochise counties), home prices remained relatively low (often under $250K), which kept homeownership attainable for locals. However, these areas have lower inventory and less economic growth, so sales volumes were smaller.
Notably, some rural communities with scenic or recreational appeal experienced a mini-boom of their own – for example, areas around lakes or the White Mountains saw more second-home purchases. In general, regional variation meant that an income of $80K might buy a modest house in Phoenix or a nice one in Tucson, but would be insufficient in Flagstaff. Households under $250K gravitated toward the markets where their dollars stretched the furthest, leading to considerable geographic sorting during 2018–2023.
Types of Properties Being Purchased
Single-Family Homes
The classic detached single-family home remained the top choice for Arizona buyers under $250K income. Despite rising prices, the majority of owner-occupied purchases in this group were single-family houses in suburban subdivisions or established neighborhoods. Buyers stretched budgets to get a standalone home, valuing the space and long-term appreciation.
However, the price surge meant that many had to adjust expectations on size, location, or age of the home. For instance, instead of a new build, a buyer might purchase a 1970s starter home in a less-central part of the Valley. By 2022, homes under $300K had become extremely scarce in Phoenix, so those with tighter budgets often bought older homes in need of TLC, or looked to smaller cities.
Sales transactions by price range in Greater Phoenix (2011–2024) showed that affordable home sales (under $300K) virtually disappeared by 2021, illustrating how buyers under $250K income had to either increase their budgets or consider other property types.
Condos and Townhomes
Attached housing became a crucial alternative for budget-conscious buyers. Condominiums and townhomes, typically priced below single-family homes in the same area, saw increased interest. In Phoenix and Tucson, first-time buyers who were priced out of houses turned to condos, especially in 2019–2021 when condo prices lagged the run-up in single-family a bit.
Townhomes in suburban developments also gained popularity as a middle-ground option (offering a bit of yard/space but at lower cost than a house). While condos come with HOA fees, their overall monthly costs often remained manageable for households in the, say, $60K–$100K income range. The condo share of purchases by moderate-income buyers ticked up during this period as a result.
Notably, condos were sometimes the only option under $250K in hot markets – by 2022, the entry-level price for single-family in Phoenix often exceeded $350K, so a $250K condo was the fallback.
Manufactured Homes
Arizona’s plentiful manufactured housing communities provided another affordable path to homeownership. Manufactured homes (mobile homes) are significantly cheaper per square foot – roughly half the cost of site-built homes – making them attractive to lower-income buyers.
From 2018–2023, the state added thousands of new manufactured homes, and these were often purchased by retirees on fixed incomes or families who couldn’t afford a traditional house. Arizona consistently ranks among the states with the most manufactured home placements. Many such homes are in 55+ parks or in rural areas where land is inexpensive.
For under-$250K households, a manufactured home (sometimes on rented land) could offer an ownership opportunity for well under $200K. The downside is they generally don’t appreciate as much as site-built homes, and financing can be harder. Even so, this segment saw strong demand as other housing types moved out of reach.
Multifamily and Other Types
A small portion of moderate-income buyers opted for 2-4 unit multifamily properties – effectively becoming owner-occupant landlords. Buying a duplex or triplex (living in one unit and renting the others) became a strategy for some younger buyers with investor aspirations. This trend was limited but did grow slightly in 2020–21, aided by low interest rates and the allure of rental income.
Additionally, some households purchased vacant land to place a home or fixer-uppers to renovate (sweat equity as a way to get a deal). But these were minority choices. By and large, Arizonans in this income bracket focused on modest single-family homes, with condos/townhomes as the Plan B. The squeeze in the under-$300K segment by 2021 forced many to compromise on property type – e.g., choosing a townhome with an extra commute, or an older mobile home – in order to achieve homeownership.
Buyer Behavior: Upsizing, Downsizing, and Second Homes
Moderate-income buyers in Arizona displayed a range of behaviors from upsizing to staying put, influenced by life stage and pandemic-era shifts.
Upsizing for Space
A prominent trend in 2020–2021 was upsizing. With remote work and remote schooling common, many families earning under $250K sought larger homes or more outdoor space. A household that might have stayed in a starter home instead jumped to a bigger house (or a house instead of a condo) to gain a home office or a yard.
This was facilitated by low mortgage rates, which made larger homes more affordable on a monthly basis. For example, a Phoenix family in a two-bedroom townhome might upsize to a four-bedroom in the suburbs once both parents could work from home.
This contributed to high demand in suburban single-family markets. Upsizing was most pronounced among those in the upper end of the < $250K bracket (e.g., dual-income households making $150K–$200K could comfortably move up).
First-Time Buyers Entering the Market
2018–2023 saw many Millennials and younger Gen X finally buying their first home. These first-timers often had spent years renting (especially after the 2008 crash) and were now in their 30s with savings. They represented a significant portion of the moderate-income buyer pool.
Notably, the profile of first-time buyers shifted – by 2023 the median first-time buyer income was $97,000, up $26,000 in just two years, and the typical first-timer was 36–38 years old (older than past generations). This reflects how only higher-earning and later-life entrants could break into the market given the affordability challenges.
Many of these first-timers stretched their budgets to buy before prices climbed even more, some receiving family help for down payments. Their behavior was to “get in while you can,” which added to the competitive frenzy through 2021.
Downsizing and Staying Put
On the other end, some long-time homeowners in this income range chose to downsize or stay in place. Downsizing (selling a larger home to buy a smaller one or move to a cheaper area) was a trend mainly for empty-nesters and retirees.
From 2018–2019, a fair number of Baby Boomers downsized as their children moved out, often relocating from big suburban homes to smaller homes in quieter Arizona towns or into condos. However, once the pandemic hit, many older owners delayed downsizing – either for health safety or because the rapid price appreciation made them hesitant (if they sold, where would they buy next?).
By 2022–2023, downsizing resumed for some, with sellers cashing in on high home values and relocating to less expensive states or to active adult communities. Meanwhile, a large cohort of homeowners simply stayed put in their current homes throughout this period.
If they had a low mortgage rate, there was little incentive to trade up or down in an inflated market. This “lock-in effect” kept housing inventory tight. Moderate-income owners who might have moved in a normal market often stayed in place because any new mortgage would be at a much higher rate by 2022+, or because suitable move-up homes were out of budget. This contributed to Arizona’s low listing inventory in 2022–2023.
Second Homes and Vacation Properties
Surprisingly, even some households under $250K jumped into the second-home craze during 2020–2021. With travel limited, owning a cabin or vacation home became very popular nationwide – vacation home sales rose 16.4% in 2020, far outpacing overall home sales growth.
In Arizona, this played out with people buying cabins in places like Payson or Pinetop, or condos in resort areas, while keeping their primary residence. Many were upper-middle-class families (closer to that $250K income mark) taking advantage of low rates to afford a second mortgage. Some also saw it as an investment, planning to short-term rent the second home part of the year.
By early 2022, second-home purchases reached a peak (they comprised a higher share of mortgages than ever), before cooling off once interest rates spiked. For moderate-income Arizonans, owning two homes was still relatively uncommon, but the pandemic did enable a segment of them to buy a getaway property or an investment rental property.
This is illustrated by stories of Phoenix residents buying a small condo in Tucson as a weekend retreat, or vice versa. Essentially, cheap financing and remote work blurred the line between “primary” and “secondary” residence for some middle-income buyers.
In summary, buyer behavior from 2018–2023 was dynamic: younger buyers clamoring to get a foothold, established families trading up to bigger spaces, and others hunkering down or diversifying into second homes. Compared to 2008–2017, buyers in this period were generally more active and ambitious, despite higher prices – a reflection of both opportunity (low rates, remote work) and urgency (fear of missing out on homeownership as prices ran away).
Comparison to the 2008–2017 Decade
The homebuying landscape of 2018–2023 for Arizona’s sub-$250K households stands in stark contrast to the preceding decade (2008–2017). The late 2000s and early 2010s were defined by a housing crash and slow recovery, whereas the late 2010s/early 2020s saw a boom and affordability crunch.
Market Conditions: Then vs. Now
2008–2012 was a buyer’s market born of foreclosure crisis – home prices plunged and bargain properties were abundant (if one had the means to buy). Many moderate-income families could scoop up homes at depressed prices or via foreclosure sales. In fact, Arizona home prices hit multiyear lows around 2011–2012, and investors dominated those sales.
In 2018–2021, by contrast, it became a severe seller’s market. Prices hit record highs each year through 2022, and inventory was at record lows. Instead of foreclosures, buyers faced bidding wars. Essentially, the earlier decade offered better affordability but harder financing, whereas the recent period offered easy financing but worse affordability.
For example, in 2012 a $200K income could buy multiple properties in Phoenix; in 2022 even a $200K income struggled to afford one median home without stretching. The share of affordable homes statewide was far higher a decade ago than in the 2020s.
Buyer Access to the Market
In 2008–2013, many Arizona households under $250K income were sidelined from buying – either they had just lost a home to foreclosure, or lending standards had tightened so much (higher credit and down payment requirements) that only the most qualified could get a mortgage. Homeownership rates dropped to the low-60s%.
By the mid-2010s, conditions improved and moderate earners re-entered the market, helped by programs like FHA loans and down payment assistance. From 2018 onward, the pendulum swung; credit was reasonably accessible and interest rates low, so financing was not the barrier – income and savings were.
The typical buyer in 2022 had a much higher income than the typical buyer in 2012. NAR data shows the median income of homebuyers hit a record high by 2023 (~$108K), whereas a decade prior it was much lower (and many lower-income buyers could still buy then, due to cheap prices). In short, the recent market increasingly favored higher earners even among “moderate” income brackets, whereas the earlier market was more accessible to those with moderate incomes if they could secure a loan.
Investor Dynamics
Investors played roles in both periods but in different ways. Post-2008, investors (including many out-of-state and institutional funds) flooded Arizona to buy foreclosed homes on the cheap, often paying cash. This arguably helped stabilize the market by 2012 but also converted a lot of homes into rentals.
Moderate-income families at that time sometimes lost out to investors but also benefitted from investor-renovated homes coming back on market affordably. In 2018–2023, investors again were active, but this time riding the upswing – buying homes to flip or rent because prices and rents were rising. Their market share hit new highs (as noted, ~20–30% of sales in Phoenix).
The effect in the recent period was more directly competitive – regular buyers often felt squeezed by investors grabbing entry-level homes. In the earlier decade, investors were grabbing distress sales that many regular buyers couldn’t have purchased anyway (due to credit issues), so the dynamic was a bit different.
Economic Context
The 2008–2017 decade started in recession and high unemployment, which suppressed homebuying by moderate-income folks (many faced job/income loss). Those who did buy in 2009–2012 got great deals, but they were few. As the economy recovered mid-decade, buying picked up slowly.
Interest rates were actually similar or even higher at times (e.g., ~5% in 2009, ~4–4.5% in mid-2010s) compared to sub-3% in 2020. By contrast, 2018–2023 included an economic boom (pre-COVID), a brief sharp recession (early 2020), then a massive stimulus-fueled boom with strong employment.
Moderate-income households in Arizona generally had more job stability and confidence in the recent period, which encouraged home purchases. The irony is that the Great Recession provided low prices but scared buyers away, while the COVID-era provided security (for some) but record-high prices. Those who bought around 2012 likely had much lower incomes than those who bought in 2021, yet they spent less of their income on housing back then.
Rent vs. Buy Decisions
From 2008–2015, renting in Arizona was often the default for many households as they rebuilt credit or waited for the market to stabilize. Renting was relatively affordable in the early 2010s; the rent-to-income ratio in Arizona declined after peaking in 2011, hitting a more manageable level by 2015.
In the late 2010s/early 2020s, that reversed – rents shot up and home prices soared, meaning neither option was easy. By 2022, rent burdens were breaking records. This pushed more people to try to buy (to escape rising rents), adding pressure to the buyer pool.
In 2023, the first-time buyer share fell to record lows as many younger households simply gave up in the face of high costs. In contrast, a decade prior first-time buyers comprised a larger share once the recovery took hold (helped by lower prices and programs like first-time buyer tax credits in 2009–2010).
In summary, the 2008–2017 decade was one of housing bust then gradual recovery, where the main obstacle for moderate-income buyers was the aftermath of the crash (credit issues, hesitance, tight lending) but affordability was actually favorable by mid-decade.
The 2018–2023 period was one of housing boom, then cooling, where the obstacle shifted to affordability and competition, even though financing was easy. Households under $250K in the recent era found themselves needing significantly higher incomes, larger down payments, and more persistence to buy a home compared to those in the prior decade.
The long-term effect is a bit bifurcated: those who managed to buy homes in Arizona in 2018–2021 have seen substantial equity gains, while those who could not buy are facing a tougher rental and pricing environment than their counterparts did a decade ago.
Rental Trends as a Comparison Point
It’s important to compare homebuying trends with rental trends for similar budget-conscious households, since not all were able to buy. Arizona’s rental market from 2018 to 2023 was marked by rising demand and rents, which in many ways paralleled the homebuying frenzy.
Rising Rents and Declining Affordability
Renters saw costs jump dramatically. Phoenix in particular experienced some of the fastest rent increases in the nation – average rents jumped 22–23% year-over-year in 2021, one of the highest spikes in the U.S. (Phoenix tied with Tampa, Las Vegas, etc. for rent growth as people flooded the Sun Belt). Even Tucson saw rents climb by double digits in 2021.
These increases far outpaced income growth, leading to worsening rent burdens. By 2022, over half of Arizona renters were cost-burdened, meaning they spent more than 30% of income on housing. About 26% of renters were severely burdened (over 50% of income to rent). This was a sharp rise from the mid-2010s when closer to 45% of renters were cost-burdened.
The brunt of this hit middle-income renters (earning ~$30K–$75K) the most, as many did not qualify for subsidized housing yet struggled with market rents.
Supply and Demand Imbalance
Several factors drove the rental crunch. After 2010, many ex-homeowners became renters (post-foreclosure), and new household formation picked up. But new housing construction lagged – Arizona building in the 2010s was well below 2000s levels. This created a housing deficit by the late 2010s.
When the pandemic migration boom hit, vacancies dropped to record lows. In Phoenix, rental occupancy hit ~96% in 2021, effectively full. Moderate-income households found it hard to even find available units.
In response, multifamily construction accelerated; Metro Phoenix set records for new apartment completions in 2022–2023 (over 10,000 units built in 2022 and ~13,600 in 2023). This new supply started to stabilize rents by late 2022, and rent growth cooled considerably in 2023 (even showing slight declines in some Phoenix submarkets). Nonetheless, rents remained much higher than pre-2018, locking many renters in place.
The Rent vs. Buy Dilemma
For households under $250K, the decision to rent or buy in 2018–2023 was complex. On one hand, rapidly rising rents provided an incentive to buy (to lock in a fixed housing cost). And indeed, many did scramble to purchase homes to escape endless rent hikes.
On the other hand, the barriers to buying (down payments, home prices) kept a large segment renting by necessity. By 2023, Arizona’s rental market showed a slight increase in vacancy and a moderation of rent prices due to economic cooling. But rental affordability was still worse than a decade ago.
Statewide, the median rent-to-income ratio stood at 32% in 2022, up from ~29% in 2015. In practical terms, a family earning $60K might be paying around $1,500 a month in rent in 2022, which made it difficult to save for a home down payment. This catch-22—high rent making it hard to save, and high prices requiring larger savings—was a defining challenge for moderate-income households in this period.
The Growth of Single-Family Rentals
The surge of investor purchases in 2020–2022 also impacted the rental trends. Many of the homes that investors bought were turned into single-family rentals. This added rental supply in scattered subdivisions, which one might think would help renters. However, investors often charged premium rents given high demand.
Some moderate-income families chose to rent single-family homes (for more space) even if they couldn’t afford to buy one. The proliferation of build-to-rent communities (newly built houses for rent) in suburbs of Phoenix is another trend that took off, targeting those who want a home lifestyle but can’t purchase. These typically came at rents comparable to a mortgage payment, meaning only upper-range moderate incomes could opt for them.
In summary, rental trends underscore the affordability squeeze on Arizona households in the late 2010s and early 2020s. Both renting and buying became more expensive relative to income. For many households under $250K, the question was not whether to buy a home but whether it was even possible.
Those who managed to buy between 2018 and 2023 often did so because low interest rates aligned with their financial readiness, despite high prices. Those who remained renters saw a significant portion of their income consumed by housing, with little relief in sight until the market cooled slightly in 2023.
Comparatively, the 2008–2017 period had its own rental hardships (peak burdens around 2011) but then a period of improvement as the housing market recovered. The recent period reversed that, culminating in a housing affordability challenge across both tenure types.
Going forward, Arizona’s moderate-income households will be watching for any market corrections or policy interventions (such as increased housing supply or first-time buyer assistance) to help balance the scales between incomes, home prices, and rents.
References
- Here’s How Homeownership in Arizona Has Changed in the Past 10 Years – Greater Phoenix In Business Magazine
- Housing Affordability in Tucson, AZ – MAP Dashboard
- Inflation woes: Home buyers need 80% more income to buy than 4 years ago – Washington Examiner
- Recent Homebuying Trends of $500K+ Earners in Arizona – Home Stratosphere
- Real Estate Investor Home Purchase Report – Redfin
- Investors purchased over 30% of Phoenix homes in Q2-2022 – Livabl
- Tucson, AZ Housing Market: 2025 Home Prices & Trends – Zillow
- Flagstaff, AZ Housing Market: 2025 Home Prices & Trends – Zillow
- U.S. States Investing Most in Manufactured Housing [2024 Edition] – Construction Coverage
- 2021 Rent Growth – Multi-Housing News
- More than half of Arizona renters are cost-burdened – Axios Phoenix
- How much do households in Arizona spend on rent? – USAFacts
- First-Time Home Buyers Shrink to Historic Low of 24% as Buyer Age Hits Record High – National Association of REALTORS®
- Vacation, Resort, and Second Homes – National Association of REALTORS®
